China has stated that it would firmly oppose any forced sale of TikTok, in response to demands by the Biden administration that the app's Chinese owners divest their share of the company or face a ban in their most important market.
TikTok CEO Shou Chew testified in front of US lawmakers amid mounting scrutiny over the app's ties to Beijing. The comments came during his first congressional hearing, in which he attempted to provide nuanced answers and allay lawmakers' concerns about the company and its parent, Beijing-based Bytedance.
However, lawmakers frequently interrupted him and accused him of being evasive. After more than five hours of testimony, the lawmakers expressed deep skepticism about his company's attempts to protect US user data and ease concerns about its ties to China.
China's commerce ministry said on Thursday that a forced sale of TikTok would seriously damage global investors' confidence in the United States. Previously, Beijing did not weigh in directly on a potential forced sale, but since 2020, it has signaled its desire to protect Chinese technology by adding recommendation algorithms, including TikTok's, to a list of technologies restricted for export.
Analysts believe that there will likely be more calls from Washington to ban TikTok if the company does not separate itself from its Chinese parent. They also suggest that the Chinese government may have veto power over the sale, according to Chew's latest response and Beijing's previous actions.
In December, Chinese officials proposed tightening the rules governing the sale of content-based recommendation algorithms to foreign buyers. TikTok's algorithms, which keep users engaged with the app, are believed to be key to its success. The algorithms give recommendations based on users' behavior, thus pushing videos that they actually like and want to watch.
Chinese regulators first added algorithms to the restricted list of technologies in August 2020 when the Trump administration threatened to ban TikTok unless it was sold. Analysts and legal experts believe that Beijing may ultimately prefer for TikTok to exit the US market rather than surrender its algorithm.